Trading Advice and Journal. Real-money, experienced trader noting finer points to perfect the art of trading. Includes commentary on some of the leading markets like the US, CME, CBOT futures, India, India NSE futures and other leading indexes of the world such as Japan and China.
Also, contains my effort to get to the markets that are conducive to day trading.

Monday, August 14, 2006

Impulses and Early Entry

Impulse Trading

Impulse trading almost always never goes unpunished. Never take a position just because you feel the market is reversing. You MUST allow your condition to be met before you take a position. This is especially true in case of day trading.

The reason is very simple. When you don't make enough money trading your Edge, how can you hope to do so with something that you are unsure. If you are in it for the long run, abandon such behaviour. You may be lucky a couple times, but the law of averages will hunt you down easily.

Timing Entries

One problem most day traders face is the timing of the entries. They say you can't time the markets. Wrong ! For intra-day trading there is no option but to time it well. Catching pullbacks after your condition is satisfied is a very good way of trying to beat the markets.

Example: Suppose you use a simple Stochastics buy signal to enter. If you scalp based on 1 min chart, allow the Stochastics to give a clean buy. In case of futures trading you always get a pullback to enter safely. The key of course, is how well you ride the trade when you are right and cut out the loser early.

Almost always, check the higher level time period chart. It helps if you are in the direction of the larger trend.